PRECIOUS-Gold up, comes off 4-1/2 month low

Greece weighs

(Updates prices, adds quotes) By Lewa Pardomuan SINGAPORE, May 17 (Reuters) - Gold rose half a percent onThursday as bargain hunters resurfaced after prices tumbled toanother 4-1/2 month low in the previous session and the eurorebounded, but gains could be limited by fears of a deepeningdebt crisis in Greece. Investors have unwound their bullish bets in gold, cashingin the metal to cover for losses in other markets, after theturmoil in Europe raised the spectre of a recession thatthreatens to hurt the global economy. Gold added $8.29 an ounce to $1,546.59 by 0250 GMT as the euro regained strength after falling to a four-monthlow on Wednesday, when bullion plunged to $1,527 - its weakestsince Dec. 29. "For now, we could see some buying on dips below $1,550. Thesituation in Greece seems uncertain and the outcome could turnthe markets either way," said Lynette Tan, an analyst withPhillip Futures in Singapore. "Investors are currently trading cautiously and we expectgold to be range trading. For now, it's probably between $1,500and $1,550." Gold, traditionally a safe-haven asset, has been moving intandem with riskier assets such as equities, industrial metalsand oil this year, as investors turn to the safety of thedollar. U.S. gold futures for June delivery rose $10.20 anounce to $1,546.80.

MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.1 percent on Thursday, after slidingmore than 3 percent for its biggest one-day drop in six monthsin the previous session. But fears of contagion spreading to other stressed euro zoneeconomies lingered after the European Central Bank said it hasstopped providing liquidity to some Greek banks as they have notbeen successfully recapitalised. IMF chief Christine Lagarde warned of "extremely expensive"consequences if Greece were to leave the euro zone, a once taboopossibility that European leaders have begun to discuss openlygiven the nation's political chaos. "Austerity is imposing intolerable unemployment andpolitical chaos in Greece, and won't permit it to repay itsdebts. Athens must abandon the euro and reintroduce thedrachma," said Peter Morici, an economist at the University ofMaryland. "For austerity and debt restructuring to work, Greece mustgenerate new exports and curb imports to accomplish tradesurpluses and earn euro to begin paying off its remaining debt."